Japan’s January real wages drop at fastest pace since 2014
JAPAN’S real wages saw their biggest fall in nearly nine years in January due to four-decade-high inflation, labour ministry data showed on Tuesday, squeezing the buying power of consumers.
Wage trends in the world’s third-largest economy are under close market scrutiny because Bank of Japan officials have said that pay hikes, combined with 2 per cent inflation, are essential to it scaling back ultra-loose monetary policy.
The fall in real wages comes despite major Japanese firms including Toyota, Nintendo and Fast Retailing paying heed to policymakers’ calls and union demands by announcing plans for historic pay rises.
Inflation-adjusted real wages, a barometer of households’ purchasing power, fell by 4.1 per cent in January from a year earlier, the largest decrease since May 2014. It followed a revised 0.6 per cent drop in December.
Total cash earnings, or nominal wages, posted a 0.8 per cent year-on-year gain in January, much weaker than a revised 4.1 per cent growth in December, when strong one-off winter bonuses drove up overall salaries.
The feeble nominal pay growth fell short of the 5.1 per cent consumer inflation rate used to calculate pay in real terms, which includes fresh foods but excludes owners’ equivalent rent. It was running at the fastest pace since 1981.
Overtime pay, a gauge of business activity strength, rose 1.1 per cent year-on-year in January, its weakest growth in 22 months.
Special payments fell by 1.7 per cent in January, after a revised 6.5 per cent growth in the previous month. The indicator tends to be volatile on months other than the bi-annual bonus seasons of November to January and June to August. REUTERS
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